Accounting

The systematic recording, reporting, and analysis [ə'nælɪsɪs] of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit.

Accounting

Text 1

Someone has to set up the bookkeeping system, monitor it, and interpret the results. These processes are called "Accounting." Accounting is the recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties the information they need to make better decisions. The accounting process is much less mechanical and more subjective. It begins with designing a system that will benefit the business, by capturing the financial information in a useful manner without being overly burdensome to the bookkeeper. Once set up, the accountant monitors the system to ensure it's doing what it's supposed to do. And finally, on a monthly basis usually, the accountant presents the financial statements to the business management in such a way that decisions can be made.

Since accounting requires an understanding of the bookkeeping process, accountants typically supervise the bookkeepers. In a large corporation there may be several, possibly even thousands of accountants. One will be designated as the "Controller" who oversees the entire accounting and bookkeeping system. In a small business, one person, often a freelancer (a contract accountant or full charge bookkeeper) will perform all the phases of accounting and bookkeeping for a company. Since "Accountant" is the more prestigious title, most small business jack-of-all-trades call themselves an "Accountant".

It merits some note that a few states actually regulate the use of the title "Accountant". In these states, the "Accountant" title is reserved for CPA's only. This does not necessarily coincide with the definition of an accountant since most CPA's don't perform the role of an "Accountant" as described above and many people that perform the accountant's roles are not CPA's. Nevertheless the laws define it as such.

Words to remember.

expense – витрати,

slip – бланк, реєстраційна картка

sales slip – касовий чек

deposit slip – депозитна квитанція

piles – гроші, кіпа

to pile up – накопичувати

cash pile - купа грошей

jack of all trades – на всі руки майстер

to merit – бути вартим уваги, заслуговувати

free-lance - нештатний

hand – контроль, влада

to hang on hand – не мати збуту

regimented – організований

to regiment – розподіляти по групах, організовувати

Text2

Accounting is a collection of systems and process used to record, report and interpret business transactions. Accounting provides an account – an explanation or report in financial terms – about the transactions of an organization (owners, government, financiers, suppliers, customers, employees etc ) that they have acted in the best interests of stakeholders rather than themselves. This is the notion of accountability to others, a result of the stewardship function of managers that takes place through the process of accounting. Stewardship is an important concept because in all but very small businesses the owners of businesses are not the same as the managers. This separation of ownership from control makes accounting particularly influential due to the emphasis given to increasing shareholder wealth (or shareholder value). Accountability results in the production of financial statements, primarily for those interested parties who are external to the business. This function is called financial accounting.

Accounting is traditionally seen as fulfilling three functions:

• Scorekeeping: capturing, recording, summarizing and reporting financial performance.

• Attention-directing: drawing the attention of managers to, and assisting in the interpretation of, business performance, particularly in terms of the comparison between actual and planned performance.

• Problem-solving: identifying the best choice from a range of alternative actions.

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."

Transactions include buying and selling goods and services, acquiring insurance, using supplies. Transactions may be recorded by hand or they may be recorded in a computer system.

After the transactions have been recorded, they are usually classified into groups that have common characteristics. For example, all purchases are grouped together, as are all sales transactions. A businessperson is thus able to obtain needed information about purchases, sales, and other transactions that occur over a given period of time. The methods used to record and summarize accounting data into reports is called an accounting system.

Anything of value that a business or organization owns is commonly known as an asset. Asset accounts include cash, which is the money on hand or in the bank; furniture and fixtures; accounts receivable, the claims against customers that owe money; stock or inventory; office supplies and many others that show what the organization owns.

Debts owed to creditors are known as liabilities. If money is owed to an organization or person for things or services purchased on credit, this liability is called an account payable. Other liabilities include wages or salaries that are owed to employees or taxes that have not yet been paid.

A separate account is kept for each asset, liability and capital item so that information can be recorded for each of them. Accounts are also maintained for income and for expenses, and like assets, liabilities or capital these accounts are also entered in the ledger which is a detailed listing of all the accounts of an organization. Entries from all the journals are transferred to the ledger at regular intervals. This process-called posting-is usually done monthly.

Journals or books of original entry are designed to record information about different transactions, including sales, purchases, cash receipts, cash disbursements . Journals have two or more columns to record increases or decreases in the accounts affected by the transactions and they often have space for a date and an explanation of the transaction.

All transactions affect at least two accounts. Each transaction must be analyzed to determine which accounts are affected and whether they should be increased or decreased. An entry made on the left-hand side column of an account is called a debit, while an entry made on the right-hand side or column is a credit. Debit, usually abbreviated DR, at one time meant value received, or literally owes. Credit, usually abbreviated CR, meant value parted with. Some bookkeepers use a far right-hand column to keep an up-to-date balance of the account.